| This 27% is
the only sum which is directly affected by the rate of exchange and with
a currency broker, you can negotiate the best rate.
Interest-only
and long term mortgages available on the market today help hedge the bet
against a poor rate of exchange. If you plan your finances well, you can
minimize the expense and maximize the benefits.
Breaking even
or earning a few extra centimes on renting your Paris pied-à-terre
makes it doubly financially sound, all while satisfying the emotional urge
to call it your home in Paris. In fact, if you buy right, equip it right
and rent right, you can earn as much as 10% a year owning a vacation rental
in Paris, which has very little non-season to speak of (January and
August are the two lowest periods).
Buying right
means purchasing a property that has high rental potential at a low enough
price to afford a good return. High rental potential depends on location,
size, accommodation, features and amenities.
Equipping it
right means providing the furnishings a renter expects - good quality linens
and mattresses, fully equipped kitchen, washer and dryer, comfortable furniture
and tasteful decor. The more luxurious the apartment, the higher the rent
you can achieve.
Renting
it right means maintaining a high occupancy rate. Agencies with a large
clientele and a substantial presence in the marketplace can keep an apartment
rented at least 60% of the year and often much higher. Agencies charge
for their service, from as low as 10% of the gross rental to as much as
40%, depending on the level and quality of service they provide - but the
higher the occupancy rate, the better your rate of return, and that usually
comes at a price.
Those who are
very familiar with the vacation rental market can advise on what part of
Paris and what kinds of apartments have the highest occupancy at the best
rates. Then, finding the right property is key to a successful investment.
This is where having professional assistance can cost you a bit on the
front end, but earn you "beaucoup" bucks on the back end.
Americans are
"spoiled" by a system called the "Multiple Listing Service"
(MLS) which enables all properties on the market to enter a pool
accessible by all real estate agents. Agents are willing to share commissions,
therefore one agent can represent a buyer and have access to all properties.
This is
not true in France. There are thousands of agencies in Paris alone,
few of which are willing to network with the others much less share commissions.
Each represents its own small pool of properties, normally in one particular
area of the city. Because of this, agents are working only to satisfy their
own pocketbooks and care only about selling the properties they represent
to yield a full commission (about 5% built into the selling price).
In general
terms then, to find a really good property, one must canvas many of
the agencies and visit lots of properties all while shielding oneself from
the agents' hard-sell tactics. For this reason, property finding services
have sprung up for not only foreign buyers, but for the savvy French as
well.
A good property
finding service is well equipped to advise on how best to structure a purchase,
vis a vis inheritance and capital gains tax laws that could later cost
you or your children lots more than it should. They will also know how
to negotiate to reduce the purchase price, agency fees and as a result,
the relative taxes. While their fees range between 2% and 5% of the purchase
price of a property, their assistance can save an incalculable amount of
time and quite a bit of unnecessary expense.
Now that
you've found and purchased your pied-à-terre, decorated and
equipped it, you'll be in the position of being the landlord and offering
your home in Paris to vacationers, just like you were... once. It's your
opportunity now to interview the rental agencies to determine who will
represent your apartment, or if you will manage it yourself. This time
around, you'll be viewing them from a different perspective, but don't
forget which ones impressed you when you were the tenant. They will likely
be the ones you'll want representing your apartment.
Editor's
Notes:
Adrian
Leeds is the editor of Parler Paris Newsletter, French Property
Insider E-zine, and author of the Leeds Good Value Guide to Paris Restaurants
of the Insider Paris Guides. She is the co-coordinator of the Parler Parlor
French-English Conversation group and host of a series of conferences including
the Working and Living in France Conference, May 20 - 22, 2005, here in
Paris. Most importantly, she and a team of professionals offer a wide range
of French property consultation services.
http://www.parlerparis.com
http://www.frenchpropertyinsider.com
http://www.insiderparisguides.com
http://www.parlerparlor.com |
